Texas Historical Commission



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|Texas Historical Commission – Main Street Program |

|10 Funding Methods for Main Street Communities |

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|These funding methods are only some of the many ways to fund projects in Main Street districts. There are other documents on the Texas Historical Commission (THC) |

|website that provide additional assistance including “Funding A Local Main Street Program” (). |

|The options listed below are not in any priority order. |

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|Texas Department of Agriculture, Texas Capital Fund, Main Street Improvements Program. |

|This program provides eligible Texas Main Street communities with matching grants to expand or enhance |

|public infrastructure in historic Main Street districts. The program aids in eliminating handicap barriers and |

|deteriorated conditions in the downtown. Grants range from $50,000 to $150,000 per community. Through this partnership with the Texas Department of Agriculture, |

|designated Main Street Programs have received more than $11.1 million in grants and leveraged more than $23.7 million in projects. |

|For more information: |

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|Texas Department of Agriculture, Infrastructure Development Program |

|This program provides grants for infrastructure development to create or retain permanent jobs in primarily rural communities and counties. The funds are for public|

|and private infrastructure projects and are intended to encourage new business development and expansion. Applications are accepted on the 20th of each month. These|

|grants, which are available to non-entitlement communities as defined by the federal government or to county governments, range from $50,000 to $1.5 million. For |

|more information: |

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|Texas Department of Agriculture, Real Estate Development program |

|This program provides zero-interest loans to fund real estate acquisition or improvements to create or retain permanent jobs in primarily rural communities and |

|counties. Funds can be used for acquisition, new construction or rehabilitation. Loan amounts range from $50,000 to $1.5 million. Applications are due the 20th of |

|each month. |

|For more information: |

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|Economic Development Sales Tax |

|(Type A; Type B) |

|Allowed under the Industrial Development Corporation Act of 1979, a city in Texas can adopt by community election a Type A or a Type B economic development sales |

|tax on top of existing sales taxes, as long as the total local sales tax option does not exceed 2%. (State sales tax rate of 6.25%; local rate up to 2% for a total |

|sales tax of 8.25%.) Type A economic development corporations are typically created to fund industrial development projects but have been used for downtown |

|economic development efforts for a project with a primary employer. Type B is more often used for Main Street projects and activities. In Section 505.158 of the |

|Local Government Code, municipalities under 20,000 in population may also use the Type B tax “to promote new or expanded business development.” Both are dependent |

|on a variety of factors such as the Act itself, the type of tax adopted locally, the ballot language under which it was adopted and the specific economic |

|development expenditures, activities and projects of the Main Street program. |

|The Texas Comptroller of Public Accounts provides an overview of the Type A tax here: |

|The statute for the Type A tax can be found here: |

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|The statute for the Type B tax can be found here: |

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|Note: a community can also have both Type A and Type B taxes in place as long as the total option remains at 2% or below. |

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|Hotel Occupancy Taxes (HOT) |

|Authorized through the Texas Tax Code and implemented through local ordinance, the categories for use are outlined in Sec. 351.101 of the code and include as an |

|allowable use: “historical restoration and preservation projects or activities or advertising and conducting solicitations and promotional programs to encourage |

|tourists and convention delegates to visit preserved historic sites or museums…” |

|The statutes can be found here: |

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|Chapter 380 Agreements |

|Chapter 380 of the Local Government Code allows for the governing body of a municipality to “establish and provide for the administration of one or more programs, |

|including programs for making loans and grants of public money and providing personnel and services of the municipality, to promote state or local economic |

|development and to stimulate business and commercial activity in the municipality.” |

|The statute is here: |

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|Texas Department of Transportation (TxDOT), Enhancements Program |

|TxDOT administers the federally funded program for non-traditional transportation related activities that “go above and beyond standard transportation activities” |

|Projects are expected to integrate into the surrounding environment in a sensitive and creative manner, contribute to the livelihood of communities, promote the |

|quality of the environment, and enhance the aesthetics of roadways. Since state highways frequently bisect historic downtowns, there are many opportunities for |

|applications from Main Street communities. Projects must incorporate elements from twelve categories outlined by TxDot. These categories include |

|landscaping/beautification, historic preservation, rehabilitation of historic transportation facilities or structures, and acquisition of scenic easements and |

|scenic or historic properties. The complete list of application and project requirements and a listing of categories can be found here: |

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|Tax Increment Financing/Tax Increment Reinvestment Zone (TIF/TIRZ) and management/improvement districts |

|Authorized under the Tax Increment Financing Act and described in Chapter 311 of the Texas Tax Code, tax increment financing through a reinvestment zone is a tool |

|used to restore areas that “constitute an economic or social liability.” By creating a TIF/TIRZ, a municipality creates a baseline value. In ensuing years as values|

|rise, the increment between the baseline and current values is returned to the district to fund improvements. Additional taxes are not paid by property owners in |

|the district, nor does it adversely impact the taxes being collected by other taxing authorities. Numerous Main Street communities have created TIF/TIRZ districts |

|in their downtown. As downtown activity increases, the increments can be used for a variety of downtown projects including infrastructure and building improvements.|

|In a public improvement or municipal management district, there is an extra assessment levied to property owners. |

|Informational web links for tax increment financing: |

|window.state.tx.us/taxinfo/proptax/registry/zone.html |

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|Statute for tax increment financing - |

|Statute for public improvement districts - |

|Statute for municipal management districts - |

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|Texas Historical Commission Certified Local Government Program (CLG) |

|CLG grants provide funding to participating city and county governments to develop and sustain an effective local preservation program critical to preserving local |

|historic resources. The grants can be used for local historic preservation projects, including surveys of historic properties/districts, preparation of nominations |

|to the National Register of Historic Places and other community-based preservation projects. |

|Web link: |

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|Localized action: funding Main Street revitalization through general debt/bonded funding, waiving |

|fees or abating sales/property taxes |

|Under its general authority, a municipality may opt to pay for public improvements in the downtown through its tax-supported general revenue fund. There are also |

|numerous types of bonds a city can use to fund projects, some of which require voter approval and some which do not. Projects funded in these ways may or may not |

|result in a tax increase to the community at large. Likewise, a city has the authority under various provisions of the Texas Tax Code, Local Government Code and |

|Government Code to abate or freeze taxes or waive fees to spur economic development activity. In the historic downtown, any private entity receiving public funds |

|through an incentive program should be required to meet certain thresholds. They should be required to undertake the rehabilitation project in a historically |

|sensitive manner, which is why preservation ordinances and formal design review are so important. |

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|Other programs and information that Texas Main Street participants should be aware of for downtown economic development activities: |

|Preservation Tax Credits |

|While not directly a funding source, preservation tax credits are an important tool for economic development in the historic downtown. A federal tax credit worth 20|

|percent of the eligible rehabilitation costs is available for buildings listed in the National Register of Historic Places. The IRS also allows a separate 10 |

|percent tax credit for buildings constructed prior to 1936, but not listed in the National Register. |

|Web link: |

|Americans with Disabilities Act (ADA) tax credits |

|Can be utilized for making ADA improvements: |

|Brownfields Site Assessment (BSA) and Targeted Brownfields Assessment (TBA) programs |

|These programs address underutilized properties where the property transaction is complicated by the real or perceived presence of contamination such as asbestos or|

|lead paint. Also includes involvement with the Texas Commission of Environmental Quality (TCEQ). Region 6 is the EPA Region that includes Texas. TCEQ regions are |

|numbered differently. Contact EPA Region 6 Main Office at 214-665-2760 or 1-800-887-6063 |

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|Business financing: Community Banks and the Small Business Administration (SBA) |

|The localized nature of community banks lead them to be good partners and connectors in Main Street communities since most of the loan needs come from very small |

|businesses. Various SBA programs provide financial and technical assistance to small businesses in the Main Street district. In turn, helping these small businesses|

|succeed is a critical component of the successful local economic development effort. The three primary loan products of the SBA are called the 7(a), microloan and |

|CDC/504 programs. Assistance is provided through SBA District Offices and Small Business Development Centers (SBDC) in each state. There are seven district offices |

|and more than 100 sites in Texas, including the SBDC locations that provide business assistance. |

|Web link: |

|Web link: |

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|Other State of Texas resources |

|Office of the Governor |

|Texas Leverage Fund: |

|(Below are for larger projects, not usually applicable to the smaller Main Street projects) |

|Texas Enterprise Fund: |

|Emerging Technology Fund: |

|Texas Department of Agriculture |

|Community Development Fund |

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|The Go TEXAN Partner Program (market and promote agricultural products) |

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|Planning and Capacity Building Program |

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|Texas Enterprise Zone |

|The Texas Enterprise Zone Act (Government Code, Chapter 2303) established “a process that clearly identifies severely distressed areas of the state and provides |

|incentives by state and local government to induce private investment in those areas by removing unnecessary governmental regulatory barriers to economic growth and|

|to provide tax incentives and economic development program benefits”. |

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|Statute - |

|Neighborhood Empowerment Zone: |

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|DF July 2, 2013 |

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